No Breakthrough Seen in DVD Dilemma

May 11, 2005

No news is good news? Maybe not. For the past several weeks, Sony and Toshiba were engaged in talks about their two competing and incompatible formats for bringing the DVD world into the HD universe. Both formats--Sony's Blu-ray and Toshiba's HD DVD--are destined to be on the U.S. market within a year or less. But at least one DTV analyst does not forecast a simple solution to a compromise over formats and that, in the end, there will be no substantive compromise.Steve Hoffenberg of Lyra Research concludes that "while those participating in these talks may have good intentions, Lyra believes that the outcome will amount to 'betsuni,' which is Japanese for 'nothing.'" Both Japanese companies are trying to head off a repeat of the VHS v. Beta fiasco of a few decades ago, where Sony's Beta lost out in North America to the better-marketed (albeit, somewhat technically inferior) VHS videotape scheme. Yet Hoffenberg believes that Blu-ray and HD DVD are sufficiently incompatible with one another that a compromise format would be extremely hard to reach technically.Another major factor to be considered, says the analyst, is that neither side wants to lose face over the issue--and inevitably, depending on which side would make the most compromises--one side would be perceived as the loser. Blu-ray players from Sony and Panasonic have already been on sale in parts of Asia for nearly a year, although, apparently, high prices have kept sales to a minimum.

Hoffenberg said that should both sides decide to start from the beginning and come up with one compatible format (highly unlikely given the investments of both sides at this point), any mass-market launch of a new or reconfigured format for high-def DVD would take an additional two years. Possible, but improbable.